Why would I use a varistor in an ESD/EMI protection circuit instead of a diode or a resettable fuse? Does anyone here have experience working with any extensive voltage suppression (see the image below) on their USB port in their projects or than the basic resettable fuse that Arduino uses on the VBUS? Could you tell me in what situations would I need any more EMI suppression than a simple inductor and resettable fuse? I found a tech note on Digikey, and Im having a hard time understanding what all they are talking about. Can someone explain in layman terms what is going on?

Working on a Smart Home Management System. Visit my blog: http://tae09.blogspot.com/ to find out more, and to keep track with the project.

A resettable fuse is very very slow in electronic terms and offers no protection from high voltage spikes.Diodes offer protection but they dump excess voltage into the system's power rails and they require a seriese resistor so the slow down fast edges. That is why there are both forms of suppression.

Why would I use a varistor in an ESD/EMI protection circuit instead of a diode or a resettable fuse?

It is application / situation dependent. If you know that your product will be used by knowledgeable person and interact with only qualified / well designed products, no protection is needed.

On the flip side, if it is to be used in a highly noisy environment (lighting within 1cm, 24x7), or by a redneck who just plug in anything and everything, or highly inductive loads, etc. you may want to have double/triple/quadruple protection.

Without knowing what you are designing for / to, it is hard to tell why you need or wouldn't need certain forms of protection.

Depending on the class of equipment you are making some standards call for tests with large voltage spikes on all signal and power lines. If you are designing to a standard you have to be able to cope with this no matter what environment or how knowlagble the end user is.

But what does the varistor do to suppress the EMI? For example, Im working on a design that may be serviced in the field by technicians or by average folks who are tech savvy. Its got a USB connection, and probably would have to undergo some EMI/Wireless testing before it becomes a real product. How would a varistor help me? And, say for example, I have an AC power source nearby. Is there some way I can calculate for the EMI that I will be expecting?

Working on a Smart Home Management System. Visit my blog: http://tae09.blogspot.com/ to find out more, and to keep track with the project.

Is there some way I can calculate for the EMI that I will be expecting?

No.

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But what does the varistor do to suppress the EMI?

It shorts out voltage spikes. These could get onto the line by inductive pickup, it is all part of EMI.Imagin the cable runing alongside the electricity supply for a lift ( elevator ), when the lift starts there is a surge of electricity, that generates a magnetic field round the wire, that induces a voltage into any wire running along side it. It is like a transformer.